A PHP Error was encountered

China Seeks to Increase Control in Rare Earth Business

China’s exports of rare-earth metals in the first five months of 2011, fell 8.8% year-on-year as prices of rare earth minerals more than doubled in the past two weeks as tightening measures in China weigh on mining, production, and exports according to market researcher Industrial Minerals.

Exports of the metals, which are used in technology applications ranging from music players to missile systems, fell to 23,742 metric tons in the January to May period, customs data supplied by Hong Kong-based Economic Information & Agency showed Tuesday. The cost of dysprosium oxide, used in magnets, lasers and nuclear reactors, has risen to about $1,470 a kilogram from $700 to $740 at the start of the month, Industrial Minerals said in an e-mailed statement. Europium oxide, used in plasma TVs and energy-saving light bulbs, has more than doubled.

China owns a controlling stake in 95% of global rare-earth output. “China has long said it will consolidate the industry but it’s moving to tighten more rapidly than many observers anticipated,” said Dudley Kingsnorth, a former rare earths project manager and now chief executive officer of Perth-based advisory Industrial Minerals Co. of Australia. “There might be an element of speculation, but I think the price rises have been driven by people who are desperate for the product.”

China has a stranglehold in the rare-earths market, as companies the like of Molycorp Inc. (MCP) and Lynas Corp. are rushing to restart mothballed projects to meet the gap in supply. Colorado-based Molycorp plans to bring the California mine into production in the second half of 2012, and then double the mine’s annual capacity to 40,000 metric tons by the end of 2013. “Demand for rare-earth elements is increasing in applications that are less esoteric than say, 20 years ago,” the London-based editor of Industrial Minerals’ website Mark Watts said in the statement. “China, which is the world’s main commercially developed rare-earth elements source of supply, is reducing exports and increasing its consumption.”

Japanese chemical companies have now raised the prices for rare-earth magnets after the Chinese policy move, after industry publications showing prices of dysprosium oxide, a rare-earth ore, continued to rise, doubling in the last two weeks. China’s cabinet and Commerce Ministry last month issued another statement further tightening control over the industry by expanding the export quota system and imposing higher taxes on mining the minerals.